Hiring-Process Quality Drops

A new report reveals a dip in hiring-process quality for the first time in five years. Experts urge company leaders to address this by taking a closer look at -- and improving -- their talent-sourcing strategies and onboarding programs.

Thursday, August 8, 2013
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It's been said the cost of a bad hire is double the positive effect of a good hire for an organization.

Now, a new PricewaterhouseCoopers/Saratoga report finds rising employee-turnover rates are exposing organizations to issues in hiring-process quality that may hurt their bottom lines in the long run."First-year-of-service turnover rates show that nearly one in four employees leaves voluntarily or involuntarily within the first year of tenure," the 2013-2014 US Human Capital Effectiveness Report states.

Scott Pollak, a PwC Saratoga director based in San Jose, Calif., says that, while first-year turnover rates are a good way to measure hiring-process quality, organizations should also assess the engagement level of new employees and the effectiveness of their onboarding process to gain more perspective on the issue.

The talent-acquisition process, he says, is comprised of specific steps, from the requisition and advertising of the job, to selecting the candidate, to getting them to accept an offer and finally, assimilating them into the organization.

"It's all about being successful at those steps," he says. "Hiring managers must also have a good handle on what the job requirements are and have a better ability to align to what the business needs, as opposed to just taking orders."

Knowledge of what roles will be required in the future of a company is important, so hiring managers can work in advance of those requirements instead of making knee-jerk reactions to last-minute hiring needs. 

"Hiring managers need to have a strategic understanding of the business," says Pollak.

David Mudd, principal at Mercer Consulting in its Toronto office, says he believes the distractions of new technology and social media could be a contributing factor in today's lower hiring-process quality.

"Companies come to us and ask about social media, but they put the basic building blocks to the side, and things start to deteriorate," he says, adding that hiring strategies must be updated frequently and companies must consider their volume and volatility in terms of hiring needs.

"As fast as business is moving," he says, "you have to have a strategy and know what your exact needs are at that specific moment in time. Many organizations don't do this as frequently as they should."

Mudd says organizations should implement a customized sourcing strategy that takes into account the different positions -- and their commensurate levels of importance - within every organization.

"You should be building the right mix of traditional and less traditional sourcing tactics to reach out and contact the types of candidates you're looking for," he says. "But we often see the same set of tactics applied across the board, regardless of the job and the geography."

Mudd says job descriptions often "go overboard" on specific requirements of a particular position.

"Long, drawn-out job descriptions are an embarrassment for the industry," he says, pointing out that descriptions should appeal to a candidate's perspective. "They should be clear, concise and talk about the great things a candidate would experience if he or she gets the job."

He adds that time-consuming, online applications are a detriment to finding good talent.

"So often, the emphasis is placed on the position being to the benefit of the employer," he says, "when you should be doing the exact opposite."

And leveraging networking-media sites such as LinkedIn can be a cost-effective way to develop a customized sourcing strategy by job and geography, says Mudd.

Quality of hire is more of a "bottom-line" measure, says Jeff Goodman, principal of Campus Strategic Partners in Dallas. "New-hire performance, promotion and retention are the keys," he says. "It doesn't sound difficult, yet few companies are really good at it."

Goodman says conventional metrics - such as time-to-fill and cost-per-hire -- are rudimentary ways to measure a very complex process.

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"It's a function of volume, time, quality, cost and job function," he says. While it may be impossible to optimize all the hiring-process factors, "HR can monitor and measure the hiring-process efficiency through metrics aimed at each step of the hiring funnel. HR can further validate the hiring process through feedback from new hires and hiring managers." 

Post-hire, companies should gather information from new employees during onboarding to reveal their perception of the recruiting process. Goodman suggests also conducting a survey of the hiring managers.

"Getting their perceptions on the quality of candidates and their satisfaction with the overall hiring process gives you an idea of where there are issues you might have to address," he says.

Jana Fallon, vice president of recruiting at Prudential in Newark, N.J., agrees with such an approach.

"We wait about nine months into the onboarding process," she says, "and then we ask our managers if they would make the same hiring decision today, because it takes about that long for them to come to a conclusion we have confidence in.

"It makes for a really telling indicator to the quality of talent, as well as that person's advancement potential," she says, adding that Prudential hires approximately 3,000 new workers annually. "We try to find out as early as we can who we will be able to put thorough leadership development."

New hires are evaluated through a quantifiable survey, but Fallon says the process is also qualitative.

"We interview the managers and ask them to think about how they would evaluate that person," she says. "This gives us more of a full picture."

And if the employee is not there after nine months, that's also an issue that has to be studied, she says, adding that Prudential checks in on hiring process quality systematically every month.

When the recession was in full-swing, Fallon says, companies including Prudential benefitted from low turnover, adding that the current state of high turnover rates has now forced many companies to get serious about measuring their quality-of-hire process.

"Prudential got systematic about implementing these tools," she says. "We don't have significant turnover problems, but you can never take your eye off the ball."

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